News, views and commentary from the telecoms sector across emerging markets and developing countries worldwide

Tuesday, 31 March 2009

Nairobi calling

I am comfortably settled on the outskirts of Nairobi, Kenya and looking forward to two full days of meetings and conference sessions. I am aiming to share some of what of I hear at this week's East Africa Com conference more-or-less in realtime. Expect a brief synopsis of any especially interesting presentations and panel discussions.

Sunday, 29 March 2009

Gabon's mobile market: room for one more?

Friday's Telegeography CommsUpdate came with news of a fourth entrant to Gabon's mobile market. Again, I find myself returning to the recent blog post in which I explored the comments of MTN CEO Phuthuma Nhleko, who has recently suggested that we can expect to see a wave of cellular sector consolidation across Africa as this year wears on.

So can Gabon, a fairly small country in west Africa, with an estimated population of just 1.5 million, support four profitable mobile operators? On the plus side, the small population together with abundant natural resources and foreign private investment have helped make Gabon one of the most prosperous countries in the region, with the highest Human Development Index score in Sub-Saharan Africa.

While the relative prosperity of the country sounds good in terms of ARPU potential, the new entrant will be arriving well after the subscriber gold rush. Mobile penetration in Gabon stands at over 100%, according to the World Cellular Information Service maintained by Informa Telecoms & Media. The latest entrant then, will need to do a great job in terms of effective differentiation and on the marketing and branding front. This may be a challenge given the deep pockets of two of three incumbent players - Zain Gabon (53.79% market share) and Etisalat-backed Moov (16.49% share) are the two operators backed by well-funded groups from the Middle East. The other operator is Libertis (29.72% share), the mobile unit of national incumbent wireline operator Gabon Telecom, in which Morroco's Maroc Telecom acquired a 51% stake in February 2007. Maroc Telecom is controlled by Vivendi, whose other investments include French mobile operator SFR and various media assets. This looks like a challenging competitive environment.

Saturday, 28 March 2009

Burundi: room for more mobile operators or set for market consolidation?

Thoughts of my imminent trip to Nairobi have, of late, prompted me to write more regularly here about African markets than I would usually. One about which I know very little is Burundi, a small Francophone country in the Great Lakes region of Eastern Africa, bordered by Rwanda to the north, Tanzania to the south and east, and the Democratic Republic of Congo to the west. Burundi, one of the the poorest countries in the world, has an exceptionally low GDP, largely due to civil wars, corruption, poor access to education, and the effects of HIV/AIDS. In light of these difficulties, it is perhaps not surprising that this land of some 3.59 million inhabitants has the third lowest mobile penetration rate in Africa - 5.48% in December 2008, according to the World Cellular Information Service database maintained by Informa Telecoms & Media. Only Ethiopia (3.16%) and its neighbour Eritrea (2.13%) have lower mobile penetration.

The cellular industry in Burundi, however, is apparently growing strongly, albeit from a particularly low base. A Telegeography article this week noted that the country's telecoms regulator, Agence de Regulation et de Controle des Telecom (ARCT), has published data showing 78% year-on-year subscriber growth from the end of 2007 to the end of 2008. ARCT figures have subcriber numbers moving from 270,000 to 480,000 over that period. WCIS numbers indicate even more impressive growth, with the Informa service indicating that the growth from y.e. 2007 to y.e. 2008 was 224,300 to 495,250.

Whichever set of figures is correct, the Telegeography article contends that
"the sharp rise has been attributed to increased competition in the local market and mobile network expansion by the four active operators - U-Com, ONAMOB, Africell Burundi and Econet."

The first of these is now part of the Orascom Telecom empire, having been acquired from India's Global Vision Limited in July, according to a Global Mobile Daily article.

In my last post on Zimbabwe, I noted that Egypt's Orascom Telecom seems to have a taste for adventurous investments which is not always shared by other major telecoms groups with multi-country footprints. Thus far, under-penetrated Burundi, too, has not taken the fancy of any truly large-scale international telecoms company apart from Orascom Telecom. U-Com's foreign-owned competitors are subsidiaries of rather smaller players.

Africell, for example, which offers which offers GSM services under the Safaris brand, was acquired by Dubai-based telecoms group VTEL Holdings in January last year, according to a Global Mobile Daily article of the time. Africell is the lone African operation of VTEL Holdings, which has stakes in an eclectic portfolio of telecoms and broadband assets scatted across the Middle East region, the Caucausus and the Caribbean.

Africell does not appear to be holding its own. WCIS figures indicate that the VTEL-backed cellco's market share was just 1.96% by December 2008. The Burundi subsidiary of Econet Wireless Holdings is also finding the going extremely tough, its share of the market having fallen below 1%. The vast bulk of the country's mobile subscriptions, then, are split between U-Com and ONAMOB, the mobile arm of Burundi's state-owned incumbent telecoms operator.

The decline of Africell and Econet Wireless Burundi (the former had nearly a 25% share of the market in December 2004; the latter had 12.45% of the market at that point), seems to support the idea recently expressed by MTN CEO Phuthuma Nhleko who believes that Africa will see a wave of telco sector consolidation in the next 1-2 years as both new entrants and more established competitors struggle to maintain healthy margins in increasingly crowded markets.

While Burundi's extremely low mobile penetration looks encouraging for potential further entrants, the overall market size is quite limited and the population's spending power is severely constrained. I wonder, then, what the future holds for two operators which are supposed to be making their Burundi debut soon, according to the recent Telegeography article, which states that two more companies hold mobile licences: Lacell and HiTS Telecom. All I know about the former is some information about the operator having done a turnkey deal with Ericsson for the network rollout. There is nothing on the website of Kuwait-based HiTS Telecom about a Burundi licence or subsidiary company.

The Burundi market appears to have proven too tough for two of its legacy cellcos. I wonder how succesful two more entrants can expect to be without the backing of deep-pocketed strategic investors. Although under-penetrated, there is something about this this small African market which has deterred major players (other than Orascom Telecom) from getting involved. I will watch future developments with interest.

Zimbabwe's troubles deter (most) big telcos from investing

I seem to have been writing about the world's trouble spots rather a lot of late. Continuing in that vein, let me now turn my attention to Zimbabwe, the unhappy scene of human rights abuses and economic mismanagement leading to hyperinflation and general impoverishment. A hotly disputed election and an outbreak of cholera have added to the myriad woes of the southern African nation.

The country's parlous economic condition has naturally affected telecoms operators.

On January 28, Global Mobile Daily reported that Zimbabwe's Econet Wireless had resumed post-paid services, after they were withdrawn in November due to foreign currency shortages. The resumption of post-paid services was made possible by the Government's “belated decision to allow operators to bill subscribers in foreign currency”.

That decision, however, seems to have led to price rises large enough to alarm the Zimbabwean telecoms regulator (POTRAZ), which, according to a recent Cellular News article, has now revised telephone tariffs downwards by up to 40% in a move meant to make services more affordable. This seems to be an interim measure, pending the completion of an ongoing review apparently intended to balance the affordability of services for consumers with the viability of operators.

Given the famously poor state of the country’s economy, it is not surprising that Zimbabwe remains a laggard in terms of mobile penetration, even in the context of Africa, which is itself the continent with the lowest cellular teledensity. According to the World Cellular Information Service database maintained by Informa Telecoms & Media, Zimbabwean mobile market penetration stood at just 12.26% at the end of last year, compared to a 37.73% penetration rate for Africa overall.

This difficult market is contested by three cellcos. Econet Wireless is the dominant player, with 59.61% of the market by December 2008. Last month Global Mobile Daily reported that POTRAZ had invited Econet Wireless and its two existing competitors to apply for 3G licenses. The market-leading MNO has reportedly been ready to offer 3G services since summer 2007, but the commercial launch has been delayed by the lack of necessary frequencies that can only be allocated by the regulator, according to the GMD article.

The other two players are state-owned NetOne Cellular (25.51% share) and Orascom Telcom-backed Telecel Zimbabwe (14.88%). Willingness to Invest in countries whose political and economic climates are not to the taste of other telcos is something of a recurring theme for Egypt's Orascom Telcom. The company made headlines last year by offering mobile services in secretive international pariah North Korea. Other large international groups, however, are strikingly absent from the Zimbabwean scene. None of the bigger African mobile empire-builders - MTN, Zain, Vodacom, Orange - have made a move on what is a decent-sized market with a population of over 13 million. My feeling is that it will not be until there is a serious improvement in the country's overall prospects that any other major groups will be tempted to set up camp in Zimbabwe.

Iraq and Afghanistan: rewarding markets, but not for the faint-hearted

Former Taliban official Abdul Salaam Zaeef: loving his iPhone

Several times over the last few years, I have had the opportunity to chat with people who have worked for mobile operators in countries where the security situation is extremely challenging. Afghanistan and Iraq naturally stand out. Something which I've found interesting is the consistent nature of the answers I've received when asking how often telecoms networks and the personnel responsible for them come under violent attack. Such attacks, I have been told, are rarer than those of us living in safer parts of the world might imagine. Why? Well, I remember being told by someone with Afghanistan experience that those engaged in armed conflict with US and UK forces were enthusiastic users of mobile phones and were therefore not very interested in destroying the infrastructure carrying their own calls and messages.

That particular conversation, however, was in March or April 2007. Since then, I have seen reports of Afghanistan's mobile networks being targeted by the Taliban. In the first quarter of last year I noticed a report from Radio Free Afghanistan story about Taliban demands that networks be shut down overnight because "U.S. and NATO forces track the [them] through their phone signals and then launch attacks on their hiding places." When these warnings went unheeded, attacks on tower sites followed on February 29 and March 1. A third attack on March 2 was said to have "destroyed" a tower in the Sangin district.

One former Taliban official who seems not to be hostile to mobile communications is Mullah Abdul Salaam Zaeef who, according to a recent article in Britain's Metro newspaper, is an enthusiastic convert to the wonders of the iPhone. Zaeef, who spent four years in Guantanamo Bay but is now "reconciled with the Afghan government after being released from US custody", uses his Apple handset to surf the Internet and find difficult locations, employing the built-in GPS. "He even checks his bank account balance online," chuckles the Metro.

The article goes on to make the case for communications technology possibly helping "to break the cycle of 30 years of relentless warfare." An example cited is that of the Afghan Star singing competition, inspired by the likes of croon-athon/Simon Cowell-ego-vehicle American Idol. The Afghan version draws millions of viewers each week and just like similar shows around the world, fans vote for a winner by text messaging. Shukria Barakzai, "a female lawmaker and former newspaper editor", is quoted as believing that this helps to promote the democratic practices. I must confess to wearing a wry smile when I read this. Here in the UK, home of the so-called Mother of Parliaments, young adults voting in greater numbers for X-Factor contestants than in the General Election is an oft-repeated (though apparently untrue) piece of 'evidence' for the notion of we Brits going to hell in a handcart.

Iraq, too, has recently been the scene of acts of violence directed at mobile operations and their staff. The news item which set me off on the chain of thought explored here today was Monday's Cellular News piece about Asiacell towers and personnel being struck in the province of Kirkuk. A spokesperson for the cellco has said that one of their security guards was killed as a result of the attack, while another suffered serious injury. According to the article, this is one of several attacks waged against the company, including the bombing of the company's customer service center in Mosul and several of its offices in Baghdad, the arson attack of the company's warehouses in Tikrit, and the destruction of the company's headquarters in Mosul.

"It is indeed unfortunate that the wave of attack against Iraq's larger companies - and Asiacell in particular, continues to be carried out by groups who seek to unsettle security and mar our national unity," said Asiacell's CEO Dr. Diar Ahmad. "I still fail to understand what these individuals gain by slaughtering innocent civilians who are guilty of nothing but undertaking their responsibilities with loyalty to Iraq first and the company second."

This, and other complications around doing business in Iraq, do not seem to have deterred Etisalat. A February update on the UAE-based telco, written by Dario Talmesio of Middle East and Africa Wireless Analyst, indicated that a deal enabling Iraq market entry was imminent. Talmesio reported that Etisalat CEO Mohammad Al Qemzi had recently announced that the operator was about to sign a joint-venture deal with Korek Telecom, which operates in the Iraqi Kurdistan region. Korek Telecom, noted Talmesio, intends to operate a nationwide network but has not yet found a suitable financing partner.

Afghanistan and Iraq - not for faint-hearted investors and certainly not for faint-hearted individuals when it comes to running operations on the ground. Both markets, however, continue to prove sufficiently attractive for certain telcos to look for ways around these numerous challenges.

Tuesday, 24 March 2009

See you in Nairobi?

Next week I am going to spend a few days in Nairobi, Kenya, where I will be attending East Africa Com, the region's telco sector conference and exhibition organised by Informa Telecoms & Media. The event takes place April 1-2 at the Safari Park Hotel, with highlight including presentations from:
Anyone based in East Africa or wanting to do business there will find this event a useful place to put faces to names, do some networking and get a sense of what's happening in the region. If you do plan to be there and have not already booked accommodation, you will find that the conference venue itself is fully booked. The Windsor Golf Hotel and Country Club seems to be nearby and of a comparable standard. Anyone who ends up there is welcome to look me up for a chat over breakfast and to share a taxi to East Africa Com conference. Anyone who reads this, plans to be in Nairobi next week and wishes to compare notes on the telecoms sector in emerging markets can drop me a line at While I will have a full schedule of meetings related to my day job, I do plan to write about the conference sessions and any announcements made at the event. I'll try to make it look pretty by adding some photos. Watch this space...

Monday, 23 March 2009

Are some African markets already contested by too many cellcos?

In yesterday's post, I tried to examine an idea articulated last week by MTN CEO Phuthuma Nhleko in an interview with the Financial Times - that there will be an African showdown leading to "fewer players with larger footprint, bigger balance sheets, more economies of scale".

Nhleko notes that 2008 saw more players entering the continent's smaller markets, some of which now have three, four or five competing operators in the mobile space.

One notable example must surely be Benin. The Francophone country ranks 31st in Africa in terms of the size of its population. Five mobile operators now compete in a market which is home to around 8 million people. The fifth entrant, joining the fray in June last year, is a subsidiary of Nigerian cellco Globacom. Yesterday I recounted some of the difficulties and delays faced by Globacom owner Dr. Mike Adenuga on the company's home patch. The Benin market has also presented challenges for the Nigerian company. A Wireless Federation article in September described how Globacom was protesting about radio spectrum allegedly withheld by the Beninoise Government. The article cited an anonymous Globacom insider who reported urgent appeals to the state to release spectrum by state-run MNO Libercom. "Sources," said the article "disclose that most of the spectrum released to Globacom so far was in the 1800MHz band but not the promised 900MHz band and this could disrupts the operator’s plan for expansion." Network expansion, in terms of capacity at least, might well be high on the agenda for Globacom's Benin operation - according to an IDG article published not long after the operator launched services, the Nigerian cello sold 600,000 SIMs in fewer than 10 days. By December Globacom Benin had around 700,000 subscriptions according to Informa Telecoms & Media's World Cellular Information Service, outstripping two much longer established operators - the aforementioned Libercom and locally-owned Bell Benin Communications. Presumably, in the consolidation scenario envisaged by MTN's Nhleko, it is these strugglers that would be more likely to fall by the wayside than Dr. Adenuga's Globacom Benin.

With four mobile operators serving a relatively small population, the Central African Republic, one of the poorest countries in the world and among the ten poorest countries in Africa, seems to me like another quite congested market. The country's 2007 census recorded a population of around 4.2 million, the 36th largest in Africa. Mobile penetration is very low, standing at just over 11% according to December figures from WCIS. This would suggest that, despite the rather limited overall market size, there remains a decent growth opportunity for each of the existing competing mobile operators. The likely ARPU from further waves of mobile service adopters, however, is surely very low: the CAR is heavily dependent on foreign aid and the presence of numerous NGOs which provide services that the country's Government is ill-equipped to deliver to the populace. The very presence of numerous foreign personnel and organisations in the country, including peacekeepers and even refugee camps, provides an important source of revenue for many citizens. While the country is self-sufficient in food crops, much of the population lives at a subsistence level. Political instability has also hampered development. As recently as 2006, over 50,000 people in the country's north-west were at risk of starvation due to protracted violence. This looks like a daunting set of trading conditions for the four mobile operators. Of these, the one to join the market most recently was France Telecom-backed Orange CAR, which has rapidly built a 25% share of the market since launching its commercial activities in December 2007.

Another well-funded later entrant in the CAR is the Moov-branded Atlantique Telecom operator, part of a group of African operations in which the UAE's Etisalat now holds a 70% stake. The CAR operation has been in business since 2005.

While the overall size of the CAR mobile market has grown quickly from a low base since the newer competitors set up their operations, with mobile penetration growing from just 1.30% at the end of 2004 to today's double-digit level, Orange and Moov have massively eroded the market share of the two longer-established MNOs. Of these, Telecel Centrafrique may now be in a better position to fight back, having been reacquired last year by Orascom Telecom.

If these two countries are truly representative, it would appear that MTN's Nhleko is quite right to contend that competitive conditions in smaller African markets may not be favourable for the support of as many competing MNOs as are currently in business. However, as last week's FT article noted, following the collapse of merger talks last year with India’s mobile groups, Bharti Airtel and Reliance Communications, Mr. Nhleko himself may be under pressure to prolong the whistlestop expansion of his six-year tenure. Mr. Nhleko acknowledges that "to maintain our growth, somehow we need to try and find larger markets". The FT piece insists that he appears focused on African opportunities, such as long-awaited new licences in fast-growing Angola and Ethiopia, one of the few countries that maintains a state-run monopoly. MTN’s balance sheet, says the article, "shows it is poised to pounce."

Let's see if further African expansion by MTN and other powerful groups this year drives the widely predicted wave of consolidation across the continent's mobile markets.


Sunday, 22 March 2009

The going gets tougher in African mobile markets?

By writing here quite regularly about developments in Africa, I might have created the impression that I am a regular visitor to that continent. Not so. While it has been my pleasure to meet many telecoms sector executives who work hard to grow their businesses and widen the availability of services across Africa, these meetings have always taken place either on European soil or in the Middle East. Typing with crossed fingers might sound difficult (and painful), but that is what I need to do today because I am fervently hoping to avoid any last-minute problems which might prevent my finally correcting this glaring omission from my experience of world travel. All going well, I should soon be representing my company in Kenya on an admittedly too-short trip to the East African country.

With this in mind, it is perhaps understandable that one article which caught my eye around a week ago was a Financial Times piece about predictions made by MTN boss Phuthuma Nhleko. The influential South African businessman believes the continent will see a wave of telco sector consolidation in the next 1-2 years, and the article contends that this will result from both new entrants and more established competitors struggling to maintain healthy margins in increasingly crowded markets.

At first sight, you might think that there is plenty of room to play in Africa, where mobile penetration stood at just 37.75% by December 2008, according to the Informa Telecoms & Media-run World Cellular Information Service. The FT's Tom Burgis feels that this figure is "far lower than in all other regions." For me, the fact that WCIS logged just 44.64% penetration across the Asia-Pacific region suggests to me that while Africa does stand out, it is clearly not the only part of the world where further robust subscriber growth looks like a possibility.

Despite initially appearing to pick out Africa as the stand-out telco sector investment opportunity of 2009, the FT's Burgis first raises then dashes hopes of truly excellent growth prospects there, arguing that "all but the earliest arrivals in most countries have struggled to make inroads, despite often having to build infrastructure from scratch."

Does that claim stand up to examination? Let's take a look at Africa's most populous state, Nigeria. Here, the country's very first mobile operator is actually among the laggards: WCIS market intelligence suggests that M-TEL, the mobile arm of wireline incumbent Nigerian Telecommunications Limited, had fewer than 260,000 subscribers at the end of 2008, down from around 700,000 in December 2006. At the end of 2005, M-TEL subscribers numbered over one million.

So what has caused this alarming exodus of M-TEL customers? While the success of MTN and others has hurt in recent years, the arrival of the South African cellco's Nigerian subsidiary in 2001 did not immediately cause a reversal of M-TEL's fortunes. Quite the reverse, in fact. The country's first-to-market MNO continued to grow well when MTN and fellow 2001 entrant Econet Wireless Nigeria hit the local mobile scene.

Any subscriber loyal to the latter ever since its launch would be forgiven for having become a bit confused by regular branding changes. Econet was redubbed Vee Mobile in 2004 as a result of a protracted wrangle that I won't even try to summarise here. 2006 saw another rebranding when the MNO was acquired by Celtel International, another transaction not without twists and turns. A notable difficulty was the the last-ditch attempt by Econet Wireless to block the USD 1 billion acquisition. At the time, Informa's Global Mobile reported that Econet, as a co-founder of the cellco, had "long asserted preemptive rights" and was claiming to have "raised more than US$1.5 billion to acquire the company" while protesting that it had been "prevented from making payment."

By the time Celtel brand made its debut in Nigeria, the pan-African mobile group founded by Dr. Mo Ibrahim had already been acquired by Kuwait-based MTC, now known as Zain. In 2007, when MTC came up with the Zain brand, it was announced that the Celtel name would continue to be used across the group's African footprtint, at least for a while. As Global Mobile Daily reported at the time, the the decision to retain the Celtel name "was aimed at maintaining continuity", precisely because of how recently the operations in Nigeria and Kenya had been rebranded.

Fast forward to August 2008: after barely two years of operating with the Celtel name, the Econet-Vee Mobile-Celtel branding roadshow arrived at its most recent stop.

"Zain wants to be one of the top 10 mobile operators in the world within the next three years, and it has developed the Zain brand as the main vehicle for that global aspiration, because the company sees mobile telecoms as a commoditized business in which branding is one of a few important differentiating factors that are available to it," said my former colleague Matthew Reed at the time. Matt, the Middle East & Africa Intelligence Centre editor continued with words of warning: "Celtel is one of the best-known and most successful homegrown brands in Africa, and there are risks - as well as huge costs - in rebranding the Celtel operations. Zain also regards its One Network scheme as an important differentiator, but to some extent it can be copied by other multicountry operators."

The Nigerian market entry of MTN and Econet-Vee Mobile-Celtel-Zain (phew!) was enabled by the January 2001 auction of some GSM licences, with one reserved for existing player M-TEL, which up to then had run a TACS network used by around 40,000 subscribers. My understanding is that the Nigerian Government had intended to sell three licences in addition to the one put aside for M-TEL. One of these was not used.

One 2001 AllAfrica article that I found today tells the story of how Mike Adenuga, a billionaire businessman, banker and oil mogul had hoped to take part in the country's GSM revolution. His company, Communications Investment Limited (CIL), had emerged as one of the auction winners of the three slots auctioned by the government, but, the article states "barely a month later, things [had] turned sour for CIL and its quest for a digital mobile telephone licence." What went wrong for CIL, continues the article, "depends on who you talk to" with the the Nigerian Communications Commission saying that "CIL failed to pay for is licence in time" and CIL saying "it had demonstrated that it had produced the funds but was delaying the final stage of payment, because it was trying to clarify the status of the frequency it had been allocated."

"When you begin from day one with a frequency that is encumbered, that puts you at a disadvantage with your competitors," a spokesman for CIL told Allafrica at the time, adding that CIL "realised that the frequency given to it by NCC had previously been awarded to another company, and was the subject of a court case."

After this frustrating delay, Mike Adenuga finally got to compete in the Nigerian mobile arena in 2003, when Globacom launched services. Since then, the company has gone on to acquire over 16 million subscribers, including the roughly 30,000 that have been persuaded of the value of 3G services since Globacom's W-CDMA network launch in February last year. Going to market later than the 2001 auction winners does not seem to have prevented Dr. Adenuga's company from establishing a solid presence in the market, although it is worth noting that Globacom's market share has been declining fairly steadily since peaking at around 31% in the Spring of 2007. Globacom, now with a 25% share of the Nigerian market, has sought growth opportunities elsewhere in West Africa, rapidly establishing a solid presence in Benin and buying a mobile licence in Ghana, where sub-50% mobile penetration and a population of over 20 million may present a good growth opportunity.

Given the MTN CEO's comments reported by the Financial Times this week, it will be interesting to see if Globacom's foray into Ghana proves challenging in terms of maintaining decent margins. Back in Nigeria, we can watch how Etisalat manages to fare, having entered the market as recently as last year. Despite Globacom being pushed back in terms of market share over the last couple of years, with 16 million subscribers, it seems hard to argue that going to market later than its competitors has hurt the company badly in the sense of establishing a presence.

I will be interested to see how far an examination of further African markets in future posts will dig up evidence to support the notion that the going is about to get tougher for new entrants and established players alike.

Sunday, 15 March 2009

Who provides telecoms services in states with limited recognition?

Late last year, I had more than one opportunity to chat with friends in the telecoms space who have worked for businesses with operations in Georgia - the transcaucasian country, not the US state. Inevitably, the subject of the August armed conflict with Russia and with separatist groups from South Ossetia and Abkhazia was discussed. I did not hear reports of very serious damage to telecoms infrastructure. This is confirmed by an extract from a statement by a shareholder in Magticom, one of the two mobile operators licensed by the Tbilisi Government:

"Magticom started the year with a strong performance compared to budget and last year. The conflict with Russia during August caused some damage both to the Georgian economy and to future economic prospects. The full effects of the conflict are yet to be determined. Magticom's physical infrastructure, however, was not badly damaged bythe conflict."

Magticom, which had a 42.28% share of Georgia's 3,352,100 mobile subscriptions by December(according to WCIS), launched a CDMA450 WLL network last summer. According to my fomer Informa Telecoms & Media colleague Gemma Bunting, writing for Mobile Communications Europe, Magti Fix is primarily aimed at people in rural areas with poor fixed-line access. As Gemma noted in her article, Magticom is also active 2G and 3G mobile services as well as Internet access via Wi-Fi and WiMAX.

The Magticom WiMAX offering caught the eye of Andrew Mitchell, writing for for Yankee Group's 4G Trends next generation wireless publication last month. Mitchell noticed Magticom's launch of a mobile WiMAX service offering on February 9, quoting the company's CEO David Lee: "The service we are launching is not only the country’s first WiMAX offering but also the fastest Internet connection available in Georgia to date." The carrier will deliver mobile WiMAX services to both consumer and business markets and plans to include VoIP as well, notes Andrew Mitchell, who also observes that offering wireless connectivity in a country like Georgia presents a number of unique challenges such as mountainous geography and the distribution of its population. Mitchell feels that WiMAX "has continually demonstrated an ability to rise to the engineering and business challenges that are unique to emerging markets."

As far as the Georgian Government is concerned, Magticom should be competing with only two other mobile operators. Of these, Geocell is the country's mobile market leader and is one of the CIS outposts of the Fintur Holdings/TeliaSonera Eurasia empire. The third officially licensed competitor is the Georgian subsidiary of Vimpelcom, which has managed to grab just a 6.78% share of the market since its launch in March 2007.

These are not, however, the only mobile operators active on land which the Georgian Government considers to be within its sovereign territory.

In the aftermath of the August conflict, Russia recognized the Georgian regions of South Ossetia and Abkhazia as independent states. Of UN member states, only Nicaragua has followed suit. Abkhazia, which lies at the eastern edge of the Black Sea, has been the scene of conflicts and tensions since the disintegration of the Soviet Union at the end of the 1980s, when ethnic tensions grew between the Abkhaz and Georgians over Georgia's desire for independence. The 13-month Abkhazian War began in August 1992, and hostilities flared up again in 1998 and 2001.

In the telecoms domain, Abkhazian desire for independence from Georgia is manifested in the form of two GSM operators which offer services in the disputed region.

One of these is A-Mobile, which started its operations on November 25, 2006. WCIS estimates that the operator now has just over 44,000 subscribers. The other, Aquafon, was established in March 2003, with its network becoming operational on July of the same year. WCIS market intelligence indicates that the operator now has around 82,000 subscribers. The population of Abkhazia is estimated to be be somewhere between 160,000 and 190,000. In September 2008, Aquafon officially launched its 3G network. 51% of Aquafon's shares are owned by Mondeo Holdings, an offshore company based in the British Virgin Islands, in turn owned Bermuda-registered ComTel Eastern, which also owns 31% of MegaFon, one of Russia's 'big three' cellcos.

On January 23rd, the UK's Guardian newspaper gave space to an article which was extremely critical of what its author percieves as the Russian Government's desire to "revive a lost empire, the Soviet Union." The writer of this piece, the lawyer Anthony Julius, alleges that "Russian businesses have... been encouraged to collude with state and state-security entities in order to expand Russian influence in the region," adding that "the Russian mobile telecoms company Megafon has operated in South Ossetia since 2004, and Aquafon (Megafon's subsidiary) has been in Abkhazia since 2003." Megafon, writes Julius "does not have a licence to operate in either region [but] on the day that fighting broke out in August last year, the company extended its coverage further into Georgian territory."

Not long before the conflict of last August, Georgia's telecoms regulatory agency had fined Megafon USD 3500 over what it alleged to be an illegal network, operated without a license, according to a Global Mobile Daily article at the time.

Although Russia and Nicaragua are the only UN member states to have recognised Abkhazia and South Ossetia, these two regions are also recognised by the de facto independent state of Transnistria, another disputed area within the former Soviet Union. Located mostly in a strip of land between the Dniester River and the Ukrainian border, Transnistria declared independence after the dissolution of the USSR. This led to a brief war with Moldova that started in March 1992 and was concluded by the ceasefire of July 1992. As with Abkhazkia, Transnistria is home to a telecoms operator of its own. Interdniestrcom, founded in 1998, offers Internet access and operates a CDMA2000 mobile network whose coverage area includes almost all of the Transnistria region.

Another de facto independent state on former Soviet territory is the Nagorno-Karabakh Republic, a predominantly Armenian-populated region which was the object of a dispute between Armenia and Azerbaijan as far back as 1918, when both countries gained independence from the Russian Empire. In the final years of the Soviet Union, the region re-emerged as a source of dispute between Armenia and Azerbaijan, culminating in the Nagorno-Karabakh War fought from 1988 to 1994. The country remains unrecognised by any international organization or country, including Armenia.

Again, this is a de facto state served by its own telecoms company. Karabakh Telecom offers GSM mobile services, PSTN services and Internet access, covering 75% of Nagorno-Karabakh and almost 100% of the capital Stepanakert and its suburbs.

In Africa, one state stands out for existing largely in a de jure capacity. Somalia has a weak but largely recognised central government authority, the Transitional Federal Government, but this is only the latest in a series of ineffectual, externally recognized governing authorities. De facto control of the north of the country resides in the regional authorities. Of these, Puntland, Northland State, Maakhir, Galmudug, acknowledge the authority of the TFG and maintain their declaration of autonomy within a federated Somalia, while Central, Southern Somalia and Kismayo are in the control of the Islamic Courts Union and Al-Shabab. Baidoa is currently the seat of the TFG, and Somalia's commercial centre. On the other hand, the Somaliland region in the north, with its capital in Hargeisa, has declared independence and does not recognise the TFG as governing authority. Its self-declared independence is unrecognised internationally due in part to opposition from the TFG and other countries, such as neighbouring Ethiopia, which fear ensuing secessionist movements.

Golis Telecom Somalia operates in North East Somalia, offering fixed and mobile services in both Puntland and the self-declared independent state of Somaliland.

I daresay this is not a truly exhaustive tour of telcos operating in states with varying degrees of limited diplomatic recognition. I just wanted to explore briefly the question of who extends communications services to people who live in the world's disputed territories. I enjoyed meandering around these curious places and if anyone reading this found it interesting that's even better.

Saturday, 14 March 2009

South Asia: cellcos contend with tough trading conditions but continue to record subscriber growth

According to a short note published by Telecompaper this week, the mobile market in Pakistan returned to growth mode in January, with overall subscription numbers rising to 90.703 million vs. the 89.907 recorded in December. I am not sure where these numbers come from. The WCIS databsase maintained by Informa Telecoms & Media logged a slightly different figure for December, 90.162 million, so it seems reasonable to think that estimates for January may vary as well.

WCIS did record a fall in subscriptions from November to December, although the exact numbers did not match those mentioned in a brief Global Mobile Daily report of 20th January, which noted that Pakistan's total mobile subscription base declined 0.6% at end-December to 89.9 million from 90.4 million in November, according to the telecoms regulator the PTA.

I looked around for an explanation for the contraction in market size late last year. The neatest seems to be the one outlined briefly at the Pro Pakistani telecom & IT news blog earlier this week. The reason given there for that fall in numbers is the loss of subscribers who had failed to register and verify their SIMs. SIM verification is currently quite a contentious issue, the MNOs apparently contending that a new system could compromise privileged information and "hurt the credibility of the cellphone industry."

Mobile operators in Pakistan may not sell active ready-to-go SIMs. Instead, new users purchase an inactive SIM and must then register their details. What is newer is the requirement for operators to furnish the National Database and Registration Authority (NADRA) with their subscribers' mobile phone numbers before the activation of SIMs. The operators reportedly had no objection to providing other data about their customers, e.g. parents' names, address, place of birth etc. This newer requirement, however, has not gone down well with the MNOs, whose leaders are reported to have said that the new clause clashes with their contracts with the PTA, which had allowed them to keep their clients' information secret.

When the Dawn newspaper contacted senior executives of Mobilink, Telenor, Warid Telecom, Zong and Ufone, the responses were strongly worded. "Why does NADRA need our customers' numbers? It's ridiculous. This information is privileged and is only to be provided to the government...if there is a (credible) national security concern as mentioned in the terms and conditions of our licences," said a Mobilink executive. "How will this information be used? It is equally detrimental for companies and subscribers," said another top executive, adding that the new clause might jeopardise the entire mobile industry.

"This was not part of the agreement when we paid Rs291 million licence fees," said a Zong executive. "Licence terms cannot be changed just like that. We are providing [a] public service. We hired more than 300 people, trained them, set up new call centres and brought in expensive new equipment just to make the SIM verification system a success," he said.

From Telenor Pakistan, Dawn's reporter learned that both the PTA and NADRA came down hard on the cellcos, leaving them with no choice but to sign the new agreement. "We were told that this agreement was not negotiable. Without signing it, we will not be allowed to sell SIMs. It's a question of compromising an industry that generates Rs2 billion annually," said a source within the Norwegian-owned MNO

"Unjustifiably, NADRA had earlier raised the verification fee by almost 200 per cent," said a representative for Warid Telecom.

After all this fuss in January, the operators appear to have been working quite hard to win back lost custom. Reduced rates have been a quick remedy.

Naeem Pani Wala, a Pro Pakistani contributor, wrote last month about the resulting 'Paisa war', taking note of Zong's especially aggressive undercutting of market-leading Mobilink. "Despite the fact that current economic situation doesn’t allow low pricing," writes Naeem, "we know that this doesn’t matter much for [the] Chinese and they beat the competition with low rates."

Naeem analyses the various TV advertisements run by Pakistan's MNOs. His view seems to be that, being unable to compete with Zong purely on price, Mobilink has decided to focus on coverage and quality of service, as in this ad:

Naeem feels this is a good approach, enabling Mobilink to remain highly visible to consumers "without investing much on packages." According to Naaem's article, Telenor Pakistan seems to be staying out of the hottest price war action and focussing its efforts on dominating the high value post paid space, as explified by this advertisement:

Over time, I assume we will see figures indicating that while Pakistan's cellcos have managed to get back onto the subscriber growth path, the price war reported by Naeem is affecting earnings.

A South Asian market where there already seems to be confirmation of this is Sri Lanka. Cellular News reported earlier this week that market-leading Dialog Telekom has suffered a sharp drop in prepaid ARPU, which fell by 22.6% from Q4 2007 to Q4 2008. "Sri Lankan consumers may have been unpeturbed by local or global economic circumstances in 2008", says the Cellular News artcle, "but Dialog was not. Despite the strong customer growth, annual revenues grew by just 1.0% to SLR 33,108m. A 48.4% rise in costs saw gross profit down 26.0% to SLR 15,478m, while EBITDA fell 41.6% to SLR 8,370m. Fourth-quarter EBITDA was even worse hit, a massive 75.6% decline taking the figure to SLR 740m from SLR 3,027m in Q4 07. This was partly due to exceptional items, but even on a normalised basis there was a fall of 51.6% to SLR 1,466m."

While subscriber growth looks good in principle, it does seem that South Asian markets are at the stage where operators have realised that extending the availability of services to ever less affluent population segments will mean higher costs and steadily declinding ARPU. Let's see how many of the region's operator suffer significant hits to EBITDA as a result.


Friday, 13 March 2009

India: Aircel invests in expanded coverage; TRAI/DoT wrangles to hamper new MVNOS?

My most recent post here was a discussion about the prospects for MVNOs gaining traction in emerging markets. Specifically, I rounded up views about which of India or Africa (taken as a whole) would be first to see truly mass-market MVNOs.

Anyone betting on India may be disappointed to hear about potentially quite unhelpful disagreements between the country's telecoms regulator and Department of Telecommunications. One of these is a difference of views about the question of whether prospective MVNOs should be allowed to be hosted by more than one MNO in a given area. According to an Economic Times (India) article today, the TRAI position is that each MVNO should stick to a single network. The DoT has decided otherwise.

This, and other bones of contention, may delay the market entry of MVNOs. As the Economic Times article notes, while the Indian Government has already cleared the entry of MVNOs, it has not issued policy guidelines because of the DoT and the TRAI failing to arrive at a consensus on several important points.

The TRAI justification for wanting to restrict MVNOs to single operator tie-ups is built on a stated concern about further complicating mobile number portability. A DoT communication to the TRAI also stated that calculation of spectrum charges would also become difficult if virtual operators tied up with multiple MNOs "as each service provider has a different slab for calculating these levies (based on the number of customers they have)." The regulatory body, states the Economic Times article, has also expressed concerns about monitoring and and maintaining service records if MVNOs are allowed to tie up with multiple operators.

The TRAI has also taken issue with the DoT suggestion that each mobile operator should be allowed to share their networks with no more than two MNVOs. The article indicates that the feeling at the TRAI is that this would not work to attract a good number of MVNOs onto the Indian market.

When (and whether) MVNOs make a significant impact in India remains to be seen, then. One Indian cellco, however, is working hard to ensure that its own impact on the market is greatly increased.

­A Cellular News story today reports that Aircel, in which Maxis Communications of Malaysia holds a 74% stake, has announced plans to double its subscriber base and invest USD 5 billion in its network over the next three to five years.

Aircel is not currently among the giants of the Indian cellular area. According to the World Cellular Information Service, the company had just under a 5% share of the country's mobile subscriptions by the end of 2008. Thus far, Aircel has not extended its reach to all 23 of India's circles (regional markets). The Cellular News piece quotes the company's COO Gurdeep Singh as saying that following recent expansion of Aircel's coverage "by April-end, we will launch our services in rest of Maharashtra, taking the total number of circles to 18." Singh added that "Hyderabad is the 13th circle where we have launched our services and with this we have completed our southern footprint."

Sunday, 8 March 2009

Africa or India: Which will be first to see mass-market MVNOs?

I was pleased to see confirmation that those to whom I handed over the task of organising this year's annual Eurasia Com conference in Istanbul have found a speaking slot for Cristobal Alonso, Chief Commercial Officer at mmChannel, a technology company dedicated to the development and management of digital entertainment services and platforms on a B2B format.

Cristobal and I have been in contact since mid-2007 without ever having the opportunity to meet face-to-face. This is a shame for me given how much he has to share about boosting the take-up of mobile value-added services. You can get some sense of Cristobal's ideas by having a look at his blog, where I noticed that he and I have something in common - we have both recently had the pleasure of attending a Mobile Monday Istanbul meeting. In January, I gained from the wonderful networking opportunity which Mobile Monday events provide and made a short presentation on the theme of mobile social networking. Cristobal was at the February get-together, and on his blog he reports on that meeting's MVNO-themed discussions. I imagine that was a lively session, given that the mooted market entry of MVNOs in Turkey has been something of a hot topic for a while now. Cristobal is quite right to compliment the MoMo Istanbul organiser Natali Yeşilbahar for the great job she has done to boost attendance and further improve the usefulness of the discussion sessions.

I guess Cristobal maintains a keen interest in whether MVNOs will succeed in emerging markets, given that his blog also mentions the insightful materials on this theme recently prepared by his colleague Carlos Valdecantos. Carlos asks whether there is any realistic prospect for successful MVNOs in Africa, where "most markets are experiencing pent-up demand, customer segmentation has only started to be a buzz word, and capacity is scarce." As Carlos notes, this is a markedly different scenario from that seen in the mature markets where MVNOs have sought to exploit the challenges faced by their host network operators, namely "slowing subscriber growth, lack of consumer segmentation, and excess network capacity."

As well as discussing which MVNO business models might work in an African context, Carlos segments the continent's many markets according to the likelihood of their being able to bear the entry of MVNOs. Carlos believes the high potential markets (good market size/GDP, strong economic liberlisation and a "dynamic" telecoms sector) are Morocco, Algeria, Tunisia, Egypt, Ghana and South Africa:

Assuming the onset of the global economic crisis has not caused him to revise his view, I assume that Peter Boyd, the former CEO of Virgin Mobile South Africa, would agree with this assertion. Back in July 2008, Boyd was quoted in a Middle East and Africa Wireless Analyst article as saying that "if there is one place where consumers need choice, it's Africa." Boyd argued that "you don't need multiple network licenses – that's an inefficient allocation of resources. Having an environment that lets people plug in an MVNO is a much more efficient way to serve consumers."

My former Informa Telecoms & Media colleague Matthew Reed wrote the article, noting that "even in South Africa, MVNOs are technically illegal. The only way for Virgin to introduce one was by forming a joint venture with Cell C, which holds a license to operate." If this and other barriers to MVNO market entry could be overcome, Boyd felt that the MVNO model enables the host network to sell its spare capacity, giving it new income to recoup expenses or invest in extending its coverage. This sounds quite compelling when applied to markets in which MNOs and governments jointly have the aim of extending the availability of services to less affluent prospective subscribers in the under-connected hinterland.

Matt's article noted that Virgin Mobile, then lobbying the Independent Communications Authority of South Africa for reduced interconnection fees, had acquired very few subscribers compared to the more than 40 million subscriptions shared by South Africa's three MNOs. Matt noted that while Virgin Moblile was lagging far behind the MNOs in this regard, "one figure where [it] is ahead of its rivals is ARPU, as a result of targeting higher-spending users rather than the mass market."

Has this situation improved for Virgin Mobile South Africa? It seem the answer is a pretty clear 'no'. Now led by new CEO Steve Bailey, the company has yet to have had a significant impact on the market, according to a more recent MEAWA article. Writing last month, Dario Talmesio notes that although the MVNO still has the highest ARPU in the market, "it had signed up just 600,000 subs by end-2008, and only 200,000 of them were active – giving it a market share of just 0.4%."

Talmesio reminds us that before launch, Virgin Mobile South Africa had hoped to acquire 10% of South Africa's mobile market within five years and asserts that target is now unrealistic. Talmesio feels that the company is unable to differentiate its services other than by using its distinctive branding. 3G services are not an option, notes Talmesio, because host operator Cell C, has not deployed a W-CDMA network. Of the three cellular network operators competing in South Africa, Cell C is alone in not having a 3G offering. Rivals Vodacom (50.98% market share according to WCIS) and MTN (35.55% share) began to sign up 3G subscribers in December 2004 and June 2005 respectively.

Virgin Mobile is also prevented from lowering its prices, Talmesio writes, because of the high interconnection rates it continues to pay. Talmesio also states that the MVNO has a more limited handset portfolio than its rivals.

In contrast to Virgin Mobile's highest ranking ARPU, host network Cell C had the lowest ARPU in the country in 2008, according to Informa Telecoms & Media. Talmesio writes that "from Cell C's perspective, hosting MVNOs makes sense when they can complement Cell C's market position and reach a different segment of the country's customers."

Talmesio seems to feel that Virgin Mobile South Africa has just one unique selling point: "the simplicity of its semiflat tariff" with "VMSA customers pay[ing] a premium rate in return for getting a simplified tariff".

Talmesio also argues that lateness to market may have worked against Virgin Mobile in South Africa, noting that "mobile penetration was already 72% when VMSA launched" and that "by contrast, the UK's penetration was just 40% when Virgin launched [there]". Therefore, he writes, "VMSA had to try to lure users away from incumbents rather than focus on greenfield users, as Virgin Mobile UK did in the late 90s."

If this last point is one of the most important inhibitors to strong growth for Virgin Mobile South Africa, this might suggest that, favourable regulatory regimes permitting, less highly penetrated markets in Africa might prove more fruitful for future MVNOs. Of the countries coloured green on the map above, perhaps Ghana looks the best bet, then. I also wonder whether Nigeria might be a viable environment for new MVNOs.

Whether MVNOs do succeed in Africa, or in other emerging markets, remains to be seen. Writing for Billing World in September, Patrick McGrory of customer care and billing giant Amdocs felt that "new services — Internet access, VoIP, WiMAX — and evolving business models like MVNOs enable cheaper and faster deployment in areas that previously were not viable prospects".

Two companies seemingly not about to launch MVNOs in an emerging market are Ericsson and Nokia. A Total Telecom report last Friday rubbishes recent rumours that the Scandinavian firms were planning to offer MVNO services in India.

"The speculation is completely incorrect – it's pure nonsense," an Ericsson spokeswoman told Total Telecom.

"Nokia is not planning on offering MVNO services in India," commented a Nokia Siemens Networks spokesman, who added "we provided input and advice to the Telecoms Regulatory Authority of India to help educate them with our experience of providing services to MVNOs, and that was it."

The denials of these two companies notwithstanding, some analysts feel that the Indian market is ripe for exploitation by MVNOs. The Total Telecom article quotes a research note from Ovum which states that "being able to enter a huge market with a population of 1.2 billion people when the mobile penetration rate is extremely low at around 26% is certainly a dream prospect for MVNOs, and many will find it hard to resist." My former Informa Telecoms & Media colleague James Moore is quoted as saying "the MVNO model will be an opportunity for GSM operators without a 3G license to offer WCDMA services."

If Africa continues to be a hostile environment for prospective MVNOs, perhaps it will be India which proves to be the first emerging or middle income market in which virtual wireless operators gain traction and become a large scale phenomenon.


Saturday, 7 March 2009

Adventures in telecoms socialism

In January, writing an article for the Com World Series blog, I discussed the links apparently being formed across Latin America by state-owned telecoms operators from countries with left-of-centre governments. The starting point was the news that Venezuelan incumbent telco CANTV was considering a strategic partnership with Ecuador's beleagured CDMA MNO Alegro PCS. I mentioned my own enjoyable trip to Caracas in April 2008, during which I had the opportunity to visit CANTV HQ. The operator had been renationalised by President Hugo Chávez in 2007. The external affairs representative whom I met was keen to tell me about how the organisation was looking to develop partnerships with telcos in politically sympathetic states such as Cuba and Nicaragua.

At that point, I was only aware of Latin America as an arena in which state-owned telecoms service providers from countries with left-leaning governments might look specifically to markets run by political fellow travellers for new opportunities.

Last month, however, I learned from a brief Global Mobile Daily report that Vietnamese operator Viettel, owned by the nation's military, has selected Huawei and Ericsson to provide equipment for expanding its networks overseas into North Korea, Cuba, and Venezuela. The report notes that the operator has yet to enter any of these markets, and states that, according to Viettel Deputy Director Tran Phuoc Minh, discussions are planned with telecoms authorities in each country.

This is just the latest move in an international expansion strategy with which Viettel has already made progress. Last month, Viettel's subsidiary in Cambodia, using the Metfone brand, officially launched mobile services. The unit is said to have over 1000 base stations supported by a 5000km fibre-optic network linking all provinces in Cambodia. The new operation reportedly attracted 500,000 subscribers in its first three months of trial services. A Saigon Times article on the operator's foray into neighbouring Cambodia indicates that the new cellco will target low-income subscribers with a wide range of low-priced services and packages. Viettel Deputy General Director Nguyen Manh Hung is quoted as saying that this approach is not only about customer acquisition but is also intended to "contribute to society".

Viettel, the article states, also announced the provision of free Internet services for nearly 1000 Cambodian schools within the next five years. Rural rollout seems to be high on the Metfone agenda, with the operating planning to "extend its coverage to Cambodia’s remote villages and islands."

Meanwhile in Venezuela, CANTV's mobile arm Movilnet is set to launch a low-cost mobile phone on the local market. A Telecompaper report this Thursday states that the device, dubbed 'El Vergatario' is the first mobile handset produced in the country. According to Movilnet President Jacqueline Faria the device will be the cheapest available in Venezuela. To be launched for Mother's Day in May, the CDMA phone will be available for VEF 30 (USD 13.95). El Vergatario will be produced at the Venezuelan Telecommunications Factory (Vetelca), a joint stock company, in which the Venezuelan state holds an 85% stake, with the remaining 15% owned by ZTE. The article suggests that Vetelca hopes to sell around 600,000 Vergatarios this year.

Movilnet's subscribers seem to be a remarkably loyal bunch and the country's mobile market overall is one in which the three competitors' share of the subscriber base has remained largely unchanged for some time. Movilnet's competitors have not remained complacent. Movistar Venezuela has been steadily migrating customers from a legacy CDMA to a newer GSM network since March 2007 and has more recently launched W-CDMA services. Digitel, owned by Venezuelan businessman Oswaldo Cisneros, is also working to roll out 3G services in two stages, starting this month, according to local news portal Ciberespacio. The operator currently offers Huawei USB modems and by mid-2009 will integrate voice and data services.

OK, comrades. That's all I have on telecom-socialism for now.

Friday, 6 March 2009

The mobile phone: the tool of freedom fighter and terrorist alike

These are turbulent times for some mobile operators in South Asia. Earlier this week, India's oldest communications service provider, state-owned BSNL, had to shut down all of its mobile network base stations along a 500 km stretch of the border with Nepal. According to an Economic Times article, this was due to security concerns. "All the BTS towers of BSNL mobile established in all Nepal bordering districts including Basti, Balrampur, Bahraich, Gorakhpur, Shrawasti, Siddharthnagar and Maharajganj have been jammed," a Government source said on condition of anonymity." By taking this step we have tried to chop off a helping hand of those involved in anti-India activities on Indo-Nepal border," the official added.

This comes very soon after the mobile operators of Bangladesh lost revenues during the recent mutiny by members of the Bangladesh Rifles regiment. In a Daily Telegraph report, I read about the Bangladesh Telecommunication Regulatory Commission asking the country's cellcos to cut off services.

Further east, the tiny minority of Burmese citizens with access to mobile services had services suspended in during the 2007 protests led by Buddhist monks.

Even for those of us lucky enough to live in quite stable countries, it is easy to imagine how mobile devices could be used to accelerate the spread of dissent during times of unrest. The Burmese Government certainly takes no chances. Services are provided by a lone operator - the state-owned Myanmar P&T - to just 0.59% of the population (by December 2008), according to the World Cellular Information Service. It will not surprise many readers to see the close correlation between very low mobile penetration and a country ranking right at the bottom of the world press freedom index compiled by Reporters Without Borders. Burma is ranked 170 out of 173. Other countries in the bottom five are Cuba (2.93% mobile penetration), North Korea (0.02%) and Eritrea (2.13%).

More encouraging is the 19.51% mobile penetration rate of Turkmenistan. The Central Asian, former Soviet Republic was until recently notable for a long list of peculiar restrictions placed on its citizens. Former President Saparmurat Niyazov enforced a ban on satellite dishes, beards, long hair, ballet, opera and recorded music. These restrictions are now being gradually relaxed by the new President Gurbanguly Berdimuhamedow, who came to power after the death of his predecessor in December 2006. Although Turkmenistan continues to attract criticism as a repressive one-party state, the relatively more open society since the passing of the country's first President seems to correlate with the steady increase in the take up of mobile services. Penetration was just 4.40% around the time the Türkmenbaşy died in office. A year later this figure had doubled, growing faster still during 2008.

I am sure many applaud the mobile phone and Internet access as being useful tools for anyone seeking to weaken the grip of a repressive regime. These sames technologies, however, are equally useful to those keen to change the world in ways which do not meet with approval of the western media - hence the network suspensions in Bangladesh and on the India-Nepal border.

Monday, 2 March 2009

A mixed week for telcos in the UK press

Non-British readers will probably only associate the city of Liverpool with the Beatles and the city's red-shirted, iconic football (translation for US readers: soccer) team. Apologies to the blue half of Liverpool for reminding you that your local rivals are much more famous. You knew that anyway. It wasn't a jibe - I can't very well make sarcastic remarks about the profile of football clubs given that I am a dyed-in-wool QPR supporter.

Liverpool sometime attracts attention for more controversial reasons. British readers may recall the colourful then-Member of Parliament (now London mayor) Boris Johnson raising the ire of Liverpudlians for making some pretty strong allegations about the character of the city's residents. In October 2004, Johnson wrote that people in Liverpool "cannot accept that they might have made any contribution to their misfortunes, but seek rather to blame someone else for it, thereby deepening their sense of shared tribal grievance about the rest of society". He said Liverpudlians "wallow" in their "victim status", adding that this is part of the "deeply unattractive psyche" of many in the city. I am sure this is untrue, and Boris did get quite a telling off from his boss. With these thoughts in mind, however, I did smile on seeing seeing the following:

"Phone giant BT charged a Huyton pensioner £100 for call out to replace two AA batteries", moaned a Liverpool Echo headline on Saturday. The accompanying article alleges that an elderly, cash-strapped and bed-bound BT customer was, without fair warning, charged £100 to have an engineer visit his home and pop a couple of new batteries into his phone. The article quotes a BT spokeswoman as saying that the customer had been advised the fault was in the phone, adding "we are satisfied from our customer service records the customer was properly advised about the possible charges ahead of the engineer's visit." If you can be bothered to watch the video clip below, you will notice the 'victim's' daughter admitting that she'd been advised to check the phone and expect a call out charge:

The Liverpool Echo doesn't let this get in the way of a good opportunity to stir local opinion about our national incumbent operator. This does make me wonder how much this paper might have contributed to the the city attracting the kind of criticism levelled by Boris Johnson.

I appreciate that a modern, competitive telco needs to be customer-centric, but I also feel that operators cannot very well cater to the whims of everyone with an unreasonable demand and a misplaced sense of injustice.

With this in mind, I was pleased to see our industry getting some praise in a UK newspaper this week. The Guardian ran a very upbeat article about how the mobile phone is helping to lift people in developing countries out of extreme poverty. It's a good read and filled with heart-warming anecdotes. This is my favourite:

"For much of his life, Mukeba didn't have an address. His corrugated iron house had no number and his volcanic ash street in the heart of Goma had no name. There was no postal service and the phone system had long since disintegrated. So when his mother died in 1995 on the other side of the Democratic Republic of Congo, her church sent a note marked only "Deograsias Mukeba, Goma". Remarkably it got to him - but three weeks after the funeral.

That was before. Now Mukeba's address goes with him everywhere. It has transformed the 33-year-old's life. It is an old Nokia mobile phone. "It was very hard discovering my mother had died and been buried and I didn't know anything about it for weeks," said Mukeba. "But that's how life was. If you lived in Goma, Kinshasa was another planet.

"I didn't really have any work. When the cell phones came I found the money and bought one because it was cool to have. It cost me $25 (£18). It's a lot.

"My brother lives in Kinshasa where he is a trader. He called me and asked me to start finding some things for him that you couldn't get in Kinshasa but you could find in Rwanda and Uganda, like some electrics and car parts. Now I speak to him every day. I send a lot of stuff. Now we are making money."

One customer in Western Europe whines about the telephone company. Another in the Democratic Republic of Congo cannot speak warmly enough about his mobile service. Our industry can frustrate and delight in equal measure. I guess it depends on your sense of perspective.


Sunday, 1 March 2009

CDMA alive and well in Nigeria?

ZTE last week announced that its CDMA EV-DO Rev. B solution will be available for commercial deployment in Q3 this year. Kevin Fitchard of Telephony magazine reports that the Chinese vendor claims to have demonstrated the viability of dedicating an entire CDMA network to 3G while still supporting both voice and data. ZTE talks up the advantages of having circuit-switched voice capacity replaced with VoIP, claiming that Rev. B will have both the capacity and low latency to support high volumes of VoIP traffic.

However, as Fitchard notes, CDMA operators are not rushing forward in great numbers to deploy Rev. B, with many of the major players having already committed to deploying LTE networks. Notable, of course, is US giant Verizon Wireless, whose LTE plans are at an advanced stage. Fitchard argues that LTE will not only give CDMA operators the same wide channels as Rev. B, but it is also a more spectrum efficient technology, going on to predict that CDMA operators are likely to bypass Rev. B entirely and focus their broadband strategies on LTE.

None of this is to suggest that the CDMA networks themselves are set to become a thing of the past any time soon. OK, in a recent post here I noted that India's Tata Teleservices (as has been the case with its rival Reliance Communications) is looking to migrate customers from a legacy CDMA to a newer GSM network. I also mentioned the case of major Brazilian cellco Vivo being further down that same migration path. However, I have also written here about new entrant Sistema Shyam Teleservices wanting to acquire other CDMA operators in order to gain better access to the Indian market. In the same article, I noted that the COAI, the Indian GSM operators' trade association, has been protesting about the possibility of being outpaced by CDMA operators in the race to deploy 3G services.

In India at least, there appears to be life in the CDMA camp. Another market where the same can be said would appear to be Nigeria. Some CDMA operators there certainly claim to be in rude health, not least Visafone, a unified service licence holder which had launched commercial services in over forty cities across twelve states, including in the capital Abuja, by early 2008. According to a year-old Global Mobile Daily report, the operator gained its license following its acquisition of CDMA operator Cellcom in June 2007, going on to grow by purchasing further CDMA players Independent Telephone Network and Bourdex Communications in November 2007 and January 2008 respectively. These acquisitions gave Visafone a subscription base of around 100,000. According to an article that I stumbled upon today, the unified service licence held by the company, which was founded by Zenith Bank International CEO Jim Ovia, allows the provision of both mobile fixed telecoms services. This followed the 2006 expiry of a five-year mobile market exlusivity arrangement enjoyed collectively by the country's GSM MNOs.

By July 2008, my former Informa Telecoms & Media colleague Matthew Reed, editor of Middle East and Africa Wireless Analyst, was writing about Nigeria's CDMA operators experiencing "strong growth". Matt noted that the unified licensing system had liberated the CDMA players by enabling them to offer nationwide services, and pointed out that Starcomms, then (and still) the country's biggest CDMA, operator had seen its subscription count grow 125.5% in the twelve month period up to March 2008. Matt also observed that Multilinks, which is controlled by Telkom, South Africa's incumbent wireline operator, had, over the same period, enjoyed at 49.2% rise in its subscription count. Other numbers reported by Matt last summer: Reliance Telecom had recorded growth of 54.84% in the 12 months to end-March, to 430,000 subscriptions, and Intercellular and Visafone had both seen their subs counts more than double over the same period.

Despite these strong growth rates then, as now, the big three GSM MNOs remained much larger players. That notwithstanding, Visafone CEO Thomas Ninan was keen to direct some highly critical comments towards his GSM rivals when profiled by Nigeria's Technology Times in November. Ninan alleged that Nigerian GSM subscribers suffer QoS issues because the operators "commit an inadequate portion of the revenue they yield from the nation’s mobile telephony market on network expansion." According to Ninan, states the article, "in a bid to gain maximum return on their investments, GSM operators only spend a relatively marginal part of their revenue to network expansion, a development that has seen subscribers... suffer... network congestion."

Ninan was quoted as saying that Visafone was "exploiting opportunities created by GSM operators that are short-changing their customers". This particular comment was made in Mauritius, where Ninan was attending the 3rd Global CDMA Operation and Development Forum, hosted by Huawei, Qualcomm and the CDMA Development Group. In that setting, I imagine that Ninan may well have got a fairly sympathetic reception for his strong words.

Ninan feels that the leading GSM players, MTN Nigeria, Zain Nigeria and Globacom have set their tariffs "very high", which opens "more space for price competition."

To some degree, it now seems that the Nigerian Communications Commission concurs with Mr Ninan's view that mobile subscribers in the country could be served better. Last month, Technology Times reported that the NCC has found it necessary to inaugurate a 12-man Industry Consumer Advisory Forum to protect the rights of consumers of telecoms services. Organisations represented on this advisory boady include the Nigerian Society of Engineers, the National Disabled Empowerment Forum, and the Consumer Awareness Organzation. The Association of Telecommunications Companies of Nigeria (ATCON) is also represented, presumably in the interests of balance.

In terms of securing better deals for customers, one area of concern, according to Muhammed Rudman, Managing Director of Nigerian Internet Exchange Point (NIXP), is the high price paid by end users of Internet services. NIXP is a neutral, not-for-profit Internet exchange committed to enhancing the exchange of traffic between networks through co-operative peering agreements. According to another Technology Times report last month, Rudman has urged the Government to mandate all service providers to connect to the nation’s exchange points, adding that a Government-mandated connection rule "is a last-ditch recommendation following the apathy shown by service providers". Rudman feels that all service providers connecting to the nation’s exchange points is a vital component of achieving "technical and economic gains for the Internet community in Nigeria."

In the mobile space, Visafone's Ninan has not been the only highly vocal booster for CDMA technology. Ninan's counterpart at Starcomms is the Lebanese-American Maher Quabain, who, in a March 2008 interview with, insisted that CDMA "consistently provides better capacity for voice and data communications than other commercial mobile technologies, allowing more subscribers to connect at any given time."

Perhaps the most bullish words on the subject of the Nigerian CDMA operators' prospects come from Reliance Telecom, whose Executive Vice Chairman Ken Aigbinode, speaking last summer, set his company the target of having acquired 10 million subscribers by 2011. This does, perhaps, look ambitious. The company's subscription numbers surged from 415,000 to 752,000 in the period Dec 2007-Dec 2008, according to Informa's World Cellular Information Service. For me, 10 million still looks like a quite distant milestone. That said, there is room for growth in the Nigerian market. Mobile penetration stands around 40%, and the country currently has a population of around 148 million. However, with no fewer than eleven mobile operators currently competing, and with the GSM players still a long way ahead, I do wonder how far the CDMA MNOs can grow. Of the GSM group, the newest, Etisalat Nigeria, is presumably well-funded, given the deep pockets of its majority shareholder from the UAE.

There are not many markets worldwide still hosting a GSM-CDMA struggle. Nigeria's looks by some measure the most interesting.